Pink's Bottom Line on Media, Money and Sports
Tax on digital ads, gas prices and the NFL quarterback carousel
In today’s newsletter, I discuss tax on digital advertising, higher gas prices and the latest move of the NFL’s quarterback carousel.
MEDIA: Tax on Digital Advertising
Maryland’s state government last week passed a measure that would allow the state to tax digital advertisements. However, that new measure’s legality is being challenged. (Here’s an excellent Baltimore Sun article about the new tax and efforts to stop it.)
In any case, the tax could generate significant revenue for Maryland at a time when state and local budgets are under enormous pressure because of the impact of the coronavirus pandemic.
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Interestingly, the tax appears to be targeting big tech companies, which have thrived during the pandemic.
That’s because the tax actually increases depending on the size of the company that serves the ads. In other words, if ads run on a large platform like Google or Facebook, for example, those companies would pay more in taxes on those ads than a smaller company would.
It is worth watching to see just what implications this digital ad tax in Maryland will have on the digital ad business across the country.
MONEY: Gas Prices
As inclement, wintry weather stretches across much of the country, that’s creating increased demand for natural gas and oil to heat homes.
That increased demand for oil, in turn, appears to be putting upward pressure on gasoline prices.
According to the AAA Gas Prices web site, the average price of a gallon of unleaded gasoline is currently about $2.57, which is roughly the highest average price that a gallon of gas hit at any time in 2020.
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If oil prices remain at elevated levels and if auto travel in the United States picks up as we head to the spring and summer and as the pandemic gets more under control, we could soon see gas prices climb even higher.
Additionally, if prices do climb, that would decrease the amount of disposable income for many consumers, which could slow the pace of the nation’s economic recovery.
SPORTS: NFL Quarterback Carousel
In a blockbuster offseason move in the NFL, the Philadelphia Eagles reportedly are trading quarterback Carson Wentz, who the Eagles had considered its franchise quarterback until recently, to the Indianapolis Colts.
The Eagles will receive a pair of draft choices, which seems like a pittance to receive for a quarterback of Wentz’s caliber.
The trade will reunite Wentz with Frank Reich, who is currently the head coach of the Colts and who was also Philadelphia’s offensive coordinator during Wentz’s first two seasons in the NFL.
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While the trade didn’t come as much of a surprise as Wentz and the Eagles appeared to have irreconcilable differences, it is the latest change of scenery this offseason for a veteran quarterback in the NFL.
It also puts the focus squarely now on a possible trade of Houston’s Deshaun Watson, arguably one of the top five quarterbacks in the league.
Watson wants to leave the Texans, but the team has said it isn’t interested in trading him.
Still, it’s likely that Watson won’t be on the Texans at the start of next season, and expect to see a team pay a steep price to land Watson — it certainly will be far more than the two draft picks the Eagles received for Wentz.
Jeremy Pink is currently COO of Geniecast, a leading virtual content and experience company. He is the former CEO of private-equity backed Broadcast Sports International where he helped lead the company to a successful sale and exit during his tenure there. He is also a former CNBC television executive in New York, London and Singapore.
The information contained in this communication is strictly for general informational and entertainment purposes and is not meant to be construed as financial, investment, tax, or legal advice. This communication is not a solicitation to buy or sell any securities. I am not a financial advisor or offering professional advice of any kind. Users should not act upon the content or information found within this communication without first seeking professional advice appropriate for their individual situation. Decisions based on information contained in this communication are the sole responsibility of the user, and use of this communication and its contents constitutes an explicit understanding and acceptance of the foregoing disclaimers.
(Newsletter Editor: Karina Pink)